Conservatives Join Forces for Bush Plans

With billions of dollars at stake, a large network of influential conservative groups is mounting a high-priced campaign to help the White House win passage of legislation to partially privatize Social Security and limit class-action lawsuits.

Corporate America, the financial services industry, conservative think tanks, much of the Washington trade association community, the Republican Party and GOP lobbyists and consultants are prepared to spend $200 million or more to influence the outcome of two of the toughest legislative fights in recent memory.

Many of these same interest groups backed Bush administration tax cuts, the 2003 Medicare prescription drug legislation and proposed energy initiatives. As President Bush begins his second term, the alliance has become an institutional fixture, providing both money and manpower to further the Bush agenda and strengthen the Republican Party apparatus.

Dirk Van Dongen, a close administration ally and president of the National Association of Wholesaler-Distributors, said the fight over Bush’s efforts to restructure Social Security by creating personal investment accounts “will be every bit as big, or bigger” than the battle over the Clinton administration’s national health care plan in 1993 and 1994.

Business and trade groups, which have invested well over $200 million during the past decade in efforts to change the rules on lawsuits, see 2005 as their best chance to win major changes. There are three major bills before Congress — on class action, asbestos and medical malpractice — and business leaders are increasingly confident.

“I think we can get them all and we should get them all,” John Engler, president of the National Association of Manufacturers, recently told business journalists. Other proponents of tort changes are less optimistic.

This diverse coalition is bound by economic, ideological and partisan concerns. Many of the groups, for instance, are staunch advocates of free-market policies and reducing dependence on government. Some of the corporate group leaders also believe that the economic health of their industries hinges on the long-term solvency of the Social Security system and on restraining costly litigation.

Some business groups have calculated that if the Bush Social Security plan fails, pressure will grow to raise payroll taxes to pay future costs of the program. Every percentage point increase would cost corporate employers about $50 billion annually.

What’s more, Wall Street and the financial sector stand to reap substantial fees from the management of personal Social Security accounts.

In the case of tougher standards for lawsuits, business leaders are seeking to place firm limits on a legal system that in recent years has produced settlements that will cost tobacco companies $246 billion over a decade, and has pushed into bankruptcy more than 70 companies tied to asbestos litigation.

For corporations wary of publicity over their involvement in this and other controversial issues, the U.S. Chamber of Commerce’s Institute for Legal Reform, the Club for Growth and Progress for America pointedly offer donors the promise of anonymity.

But just as Social Security and lawsuit legislation have united right-of-center groups, they have also joined together, in opposition, much of the left: the influential AARP seniors organization; labor unions; the Association of Trial Lawyers of America; consumer, civil rights and environmental groups; and much of the Democratic Party.

The emergence of the center-right phalanx backing the Social Security proposal is a major victory for the Cato Institute, a prominent libertarian group. In the late 1970s and early 1980s, Cato was almost alone in its willingness to challenge the legitimacy of the existing Social Security system, a politically sacrosanct retirement program.

Recognizing the wariness of other conservatives to tackle Social Security, Cato in 1983 published an article calling for privatization of the system.

The article argued that companies that stand to profit from privatization — “the banks, insurance companies and other institutions that will gain” — had to be brought into alliance. Second, the article called for initiation of “guerrilla warfare against both the current Social Security system and the coalition that supports it.”

Just 22 years later, the business alliance is fully on board in the drive to create partially private Social Security accounts.

The campaign is being funded largely with money set aside by major corporations to influence the outcome of the congressional debate. The money will go for lobbying, television advertising, grass-roots campaigning, letter-writing and phone calls in a bid to win majorities in the Republican-controlled House and Senate.

Groups have campaigned for a restructuring of lawsuit rules off and on over the past five years and before now have spent $200 million seeking favorable legislation. Those groups are prepared to spend an additional $50 million or more this year. Last week, they began to see the fruits of their labor when the Senate overwhelmingly approved a measure that would sharply limit the ability of people to file class-action lawsuits against companies.

A group of Fortune 500 companies that are defendants in asbestos cases have formed the Asbestos Study Group, which paid annual lobbying fees of more than $10 million in 2003 and 2004. The American Medical Association — determined to protect doctors in malpractice cases — has an annual lobbying budget of more than $17 million. The American Insurance Institute spends about $5 million annually, a significant share of which goes to efforts to restrict lawsuits.

A 2003 study by the consumer group Public Citizen, which opposes most of the Republican-backed lawsuit legislation, found that more than 475 lobbyists had been hired by more than 100 trade associations and corporations representing industries that often are defendants in class-action litigation, including tobacco, drugs, automobiles and large retailers.

In addition, many conservative think tanks have joined Cato in supporting Social Security privatization, recognizing that the proposal offers a rare opportunity to restructure a pillar of liberalism and the social welfare state.

The Heritage Foundation, the National Center for Policy Analysis, the American Legislative Exchange Council, and such advocacy groups as the Club for Growth, Progress for America, FreedomWorks, Americans for Tax Reform and the Free Enterprise Fund are now in the middle of the fight.

“Conservatives intend to fix Social Security, welfare and Medicare — the very programs that liberals created. And we’ll do so no matter how often the left yells, ‘Stop!’ ” Edwin J. Feulner, president of the Heritage Foundation, vowed recently.

Republican strategists see in both Social Security and lawsuit legislation the possibility of strengthening their center-right coalition. Enactment of the latter could also have the effect of weakening the Democratic Party by reducing the income of pro-Democratic trial lawyers, a major source of campaign contributions.

The Business Roundtable and the National Association of Manufacturers have set up two umbrella organizations.

One, the Alliance for Worker Retirement Security, will pressure Congress directly, capitalizing on the lobbying staffs and corporate executives of the member companies.

The other, the Coalition for the Modernization and Protection of America’s Social Security, will conduct a nationwide television and grass-roots pressure campaign costing $15 million to $20 million.

COMPASS has hired OnPoint Advocacy to conduct grass-roots lobbying and Apco Worldwide Inc. for public relations. Tita Freeman, communications director at the Business Roundtable, said COMPASS has a budget of $15 million to $20 million, which may grow as the fight progresses.

© 2005 The Washington Post Company